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Bitter cold and repeated heavy snowstorms helped make winter in the Northeastern U.S. particularly brutal this year. Adding to the chills were soaring prices for heating oil that are likely to be the highest on record.

By the time the six-month-long winter heating season is over, the average homeowner in the Northeast will have laid out $2,431 for fuel to fire boilers and furnaces, Reuters reported, citing data from the U.S. Energy Information Administration, which provides forecasts of energy costs. The amount is about $200 more than the Energy Department predicted in October -- and almost $500 more than the average just a year ago.

Temperatures were indeed colder than average in December and January, but that's not the source of the high price for heating oil. "[R]ising oil prices, not colder weather, have been the primary cause of the increase in forecasts of average winter season heating expenditures for households heating with oil," the EIA said in its statement.

The price of heating oil rose to $90 a barrel this month, up from $78 in October, Reuters noted. That rise pushed the average retail price for residential heating oil to $3.59 a gallon this week, up 73 cents from a year earlier, the EIA said.

Demand Is Down, But Not Prices

The increase in the cost of heating oil as crude prices have steadied or fallen in recent days is a conundrum, says Josh Garrett, managing editor of HeatingOil.com, a Manhattan-based information service for both dealers and consumers.

With healthy supplies of heating oil and rising temperatures in the Northeast, prices have little reason to remain at such high levels, Garrett says. Mild weather in recent days has lowered demand 20% from levels typical for this time of year.

Garrett offers no predictions about where heating oil prices will go as the Northeast heads into the final six weeks of the heating season. "I'm at a loss," he says. Prices should slide lower because supplies remain high. But, he adds, that's been true the entire season, and plentiful stores of heating oil haven't had much effect on lowering prices.
Budget Cuts Target Home Heating Assistance Program

Sustained high prices for home heating oil raise the specter of fewer people being able to afford to keep their homes warm come next heating season. That will be especially true if cuts to the federal Low Income Home Energy Assistance Program are implemented.

As part of his draft budget released last week, President Obama targeted $2.5 billion in cuts to the $5.1 billion program that helps low-income households with energy costs. Obama justified the cuts by noting that the price of natural gas, a dominant heating source nationwide, has fallen steadily in the last two years.

But that's not true for heating oil, says Garrett, in a blog post at HeatingOil.com. After hitting their highest levels ever in the summer of 2008, crude oil prices crashed along with the economy in late 2008 and early 2009, making heating oil "quite affordable." Since then, however, prices have risen sharply, doubling during the slightly more than two years since Obama took office and rising 38% in the last year alone.

Garrett doubts that the proposed 50% cut in LIHEAP funding will make it into the final budget, noting that strong negative reactions from constituents and lawmakers "will translate into a much less severe cut." Legislators from Maine to Maryland, regardless of party, will work together during budget negotiations to ensure that the cuts to the program aren't made, he says.

"They realize this is a huge issue for their constituents," says Garrett, "and they're definitely not going to stand idly by and let the program get gutted."

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adelston2

SO, JUST LET THEM EAT CAKE AND FREEZE TO DEATH...THIS GOVERNMENT IS PATHETIC....WE NEED TO FIRE SOME SENATORS...NOT JUST TAKE AWAY THEIR JOBS, I MEAN REALY JUST FIRE THEM UP AND CREATE SOME HEAT IN THE HOMES OF THESE PEOPLE....THESE SENATORS SERVE NO USUFULL PURPOSE SO, MABEY WE SHOULD JUST USE THEM AS FIREWOOD INSTEAD....CAUSE ALL THEY ARE RIGHT NOW IS DEADWOOD.AND WE REALY NEED TO CUT THAT BUDGET DEFICIT...GOTTA TRIM THAT BUDGET AND FIRE ALL THOSE GOVERNMENT EMPLOYEES...ESPECIALLY THOSE SENATORS AND REPRESENTATIVES....THE REAL DEADWOOD PEOPLE...THAT DO ABSOLUTELY NOTHING TO EARN THEIR KEEP...ALL WE NEED IS 1 PRESIDENT, 1 SENATOR, AND 1 REPRESENTATIVE....AND THEY WILL GET AS MUCH WORK DONE AS ALL THESE OTHER DEADHEADS GET DONE...ABSOLUTELY NOTHING.

Mr. Schepp: A chart of heating oil can be found at www.bigcharts.com: Enter UHN... advanced chart... all data... weekly... draw chart. A user of heating oil can hedge against heating oil increases. I have been recently commenting that the average investor needs to begin to think about how he/she can use ETFs to hedge (against risks) in all areas of the economy. I believe the average investor (and user of commodities (e.g., heating oil)) needs to do more research in the area of hedging.

My God Oil is going down an why are we still paying high prises for Gas an to heat our homes??????????? What do we have to do to get the prise to come down??????? Gas is still over $3.00 a gal. God please help us we need your help now an soon. This President said he is for the people well Ya he is the RICH PEOPLE just like Bush. And will we get a raise on our SS next year or will they say things haven't gone up. I don't know where they are living but things are higher an going up every day. God Plears Help Us. We all have to pray!!!!!!!!!!!

Prices never come down as fast as they go up....anybody surprised??? People who need the help the most get screwed....many probably count on Social Security to survive...Oh Yeah....no inflation so no increases.....its sad that we make people choose bewteen staying warm....medicine....food...Makes me sick.